Computer Industry Sales Brisk But Some Blips Ahead on Screen

IT'S been two decades since the global personal computer revolution was launched from from a California garage.

Today, 2 out of every 3 American households with children and an income greater than $50,000 have a personal computer. Pentium chips and Windows 95 are as much a part of the consumer lexicon as Egg McMuffins and Levi's. And computer forecasters say PC sales worldwide will overtake sales of television sets before 2000.

But for all the hoopla and Las Vegas glitz that surrounds this week's annual gathering of the industry, known as COMDEX, there are hints that the traditional double-digit growth of personal computers may soon be slowing.

The Internet is being flagged by some as a potential threat. Others say the dizzying pace of change is alienating some consumers. "I tend to buy the latest, fastest, and greatest system and programs out there," writes David Smith on the CompuServe on-line service. "And I am almost getting a little tired of the changeover and new learning required to keep up."

For the moment, though, business is booming for hardware and software companies alike. Manufacturers of computer chips are scrambling to build new chip factories. Spot shortages have cropped up in everything from computer batteries to video-display picture tubes. "Across the board, demand remains strong," says Tim Curran, manager of Panasonic's computer-products group in Secaucus, N.J.

Many manufacturers expect a strong Christmas season. Dataquest, a San Jose, Calif., research firm, forecasts a record 17 million PCs will be sold in the final three months of the year, up 21 percent over the same period last year. "The mood here is pretty upbeat," says COMDEX spokeswoman Sue Lonergan.

But the rosy predictions begin to fade beyond Christmas. For example: The red-hot market for home PCs is up an estimated 26 percent this year. But it should slow down to 15 percent or less, according to several analysts. Sales of drives for CD-ROMs, the optical discs large enough to store an encyclopedia, will jump an estimated 62 percent this year but only 25 percent next year, forecasts Freeman Associates, a Santa Barbara, Calif., management-consulting firm.

By 2000, the Semiconductor Industry Association estimates annual chip sales will double worldwide. But much of that growth depends on sales of personal computers.

Computer companies have targeted the home because that's where the opportunity lies. While most American businesses that need a computer have a computer, only 1 out of 3 American homes has one.

Trouble is, the easy sales into the home have already been made. Only 5 percent of the homes without a computer said they were "extremely likely" to get one during the next six months, according a recent survey by a San Francisco-based research firm.

Computer users do appear to be moving rapidly to Microsoft Corporation's new operating system, Windows 95. The company has sold more than 7 million copies of the software in its first two months. A survey of corporate customers last month by Stream International in Norwood, Mass., found that 82 percent of the companies planned to migrate to Windows 95.

The shift is likely to spur upgrades of other software and hardware. But will users upgrade again when the 1996 versions come out?

The reasons to do so are less compelling. The Pentium Pro, the next-generation microprocessor from Intel Corporation, will not give the average computer user a significant boost in power or speed. To get it, users would have to upgrade to high-end software currently marketed for computer networks.

There's another threat to the PC boom. It's the global computer network called the Internet. According to some experts, the Internet will take away market momentum from the PC because the network will have all the interesting information people want.

Why would computer users keep buying the fastest, most powerful personal computers these experts ask, if all they want to do is get access to the Internet? In his speech today, IBM chairman Louis Gerstner is expected to lay out his vision of this network-centered future.

Others in the industry strongly oppose this view. While computer users want access to the Internet, they argue, they'll use a PC to do it and they'll take advantage of its processing power to manipulate the information. "Our model still seems to make sense," says Intel spokesman Howard High.

On Tuesday, Microsoft chairman Bill Gates is expected to offer his vision of how PCs will remain at the center of the computer world.

Some companies are playing both sides. Quarterdeck Corporation, a leading maker of PC utility software, has made a big move into Internet software this year.

"Trends in technology are going so fast that predictions today can be outdated tomorrow," says Quarterdeck president Gaston Bastiaens. But he expects Internet software will represent the biggest chunk of his company in a couple of years.